Trade Tensions Weigh On Shares
On the face of it the local market should start with a small gain this morning after Wall Street reversed course and closed on the up early Saturday (with the exception of the Dow).
But don’t bet on it, the market could start higher and end lower, it will depend on hw Asian markets trade during today.
Eurozone shares fell 2.1% on Friday in response the President Trump’s tariff announcement, but the on Wall Street, the S&P 500 gained 0.5% (after being down more than 0.5% in afternoon trading.
Reflecting the positive US lead ASX 200 futures rose 12 points or 0.2% on Friday night pointing to a positive start to trade in the Australian share market on Monday.
That was after the Australian sharemarket finished last week down 1.2% in reaction to Trump’s tariff tantrum.
The ASX 200 Index dropped 44 points or 0.7%, to 5,928.9 points on Friday, its worst session in three weeks. The NZX 50 fell 0.65% to 8,288 points because of fears the Trump administration’s actions would spark retaliation. More details will be confirmed this week.
Over the week US shares fell 2%, Eurozone shares lost 3.4%, Japanese shares fell 3.3%, Chinese shares lost 1.3% and Australia fell.
Bond yields were flat to down slightly helped by safe haven demand (though they rose on Friday afternoon in the US) and commodity prices fell as did the Australian dollar which ended around 77.50 US cents.
The Dow fell 70.92 points, or 0.3%, to finish at 24,538.06, after earlier falling as much as 391 points.McDonald’s shares were the biggest drag on the average, falling 4.8%, for its for its largest one day slide in almost 10 years (the last was in the GFC sell off in October 2008).
The S&P 500 rose 13.58 points, or 0.5%, to end at 2,691.25 and reversed early losses. The Nasdaq Composite Index ended up 77.31 points, or 1.1%, to 7,257.87.
For the week, the Dow fell 3.1%, the S&P lost 2% and the Nasdaq shed 1.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan dropped 1.1%, led by a 1.1% fall in South Korean shares while Japan’s Nikkei tumbled 2.9% on Friday.
For the week, they are down 2.3% and 3.6% respectively.
In Europe, Germany’s DAX 30 index sank 2.3% on Friday to close at 11,913.71, ending 4.6% lower for the week. It was the lowest close for the German index since March 22, 2017.
The pan-European Stoxx Europe 600 index suffered a 2.1% drop to end at 367.15. That left the benchmark down 3.7% for the week, breaking a two-week running streak.
In London, the FTSE 100 index lost 1.5% to end at 7,069.90, the lowest close since December 23, 2016. For the week, the Footsie fell 2.4% for a second straight weekly decline.
The 10-year US Treasury bond yield climbed 6 basis points to 2.86%, after yields fell on Thursday by a sharp 6 points.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.